Casual Socks,Mid Calf Casual Socks,Color Men Socks,Silicone Grip Socks Shaoxing Evergreen Knitting Co., Ltd. , https://www.egsock.com
Post-crisis era can jump out of the price trap
In the post-crisis era, global economic conditions have gradually stabilized following the international financial crisis. However, experts emphasize that this stability is not a sign of full recovery, but rather a period marked by lingering uncertainties. While some companies managed to maintain or even grow their exports during the early stages of the crisis due to stable RMB exchange rates and lower raw material costs, the current situation presents new challenges.
As demand slowly recovers, many flax-spinning enterprises are struggling with rising production costs and limited ability to increase prices. This has created a difficult trap for the industry, where companies find it hard to regain pricing power once they’ve had to cut prices to clear inventory. According to Xu Jixiang, president of the China Hemp Industry Association, “Once prices start to fall, it’s very hard to lift them again.â€
Many businesses resorted to lowering prices to maintain sales volume, especially when cash flow was critical. However, this strategy has led to thinner profit margins, with the average profit margin in the hemp textile industry hovering around 3%. The situation is further complicated by rising labor costs and a severe shortage of skilled workers. In places like Zhuji, Zhejiang, hemp factories struggle to attract and retain workers due to harsh working conditions, such as high humidity and temperature levels.
At the same time, the cost of raw materials is also on the rise. European flax prices have been particularly strong, and industry insiders predict a new cycle of price increases. This trend is not isolated—natural fibers like silk, cotton, and wool have all seen significant price hikes. For example, the price of silk has risen by 10% to 20%, while cotton prices have surged nearly 70% since 2009.
Faced with these pressures, many companies are looking for ways to break free from the trap. One effective approach is to focus on producing differentiated, high-quality products. Changzhou Meiyuan Group, for instance, successfully sold high-count linen yarn at an astonishing price of 380,000 yuan per ton—far exceeding the cost of a Mercedes-Benz E300. This product not only commands a premium price but also enjoys long delivery times, highlighting the strong demand for high-end flax products.
The key to breaking out of the pricing trap lies in differentiation. Companies that can produce unique, high-quality goods gain more control over pricing. As one executive noted, “If other companies can’t make it, we can charge more.†This shift in positioning allows firms to move beyond price competition and focus on value creation.
Ultimately, the path to recovery involves innovation, quality improvement, and strategic positioning. By focusing on differentiated products, flax companies can regain control over their pricing power and navigate the challenges of the post-crisis era more effectively.